The company's shares have slumped 18.25p to 26p - a 41% decline - after it warned of weak demand for its ingots and wafers for photovoltaic cells. It said it was likely to make a loss in the second half of the year if current trends continued, and this could threaten the dividend to shareholders. The company said increased production capacity and high inventories had led to a fall in wafer prices, with demand in its key market of Germany falling to half the 2010 level. Jefferies analyst Gerard Reid said:

We believe trading conditions will persist. We think it will be next to impossible for PV Crystalox to generate positive earnings in the second half of the year. The price pressure from Chinese companies such as GCL Poly is enormous and given our view that there is over-capacity at this part of the value chain anyhow it does not bode well for PV Crystalox or wafer manufacturers.

We believe that over the next 12 months consolidation will come to the solar industry. Mergers and acquisitions are likely as are plant closures and restructuring particularly amongst European names.

Altium was equally glum:

We would assume that no dividend will be paid should the company produce a loss in the second half of the year and this would remove further pricing support. We move our recommendation from buy to hold.